In his first meeting with Mr Blair since succeeding Ariel Sharon, Mr Olmert outlined his proposal for the closure of some of the more remote Jewish settlements in the West Bank while annexing three major settlement blocs. The Israeli prime minister told a Downing Street press conference that the proposed unilateral withdrawal in the West Bank, following on from the pullout from Gaza last year, was "generous" and would leave the Palestinians with 90% of the West Bank.

Mr Blair insisted the only way forward for Israel was not unilateral action but to embark on negotiations with the Palestinians to end the conflict. "I do not want to go down any other path than a negotiated settlement," Mr Blair said.

He did not deviate from the longterm position that Israel should return to its 1967 borders and hand over the West Bank in its entirety to the Palestinians to form their own state.

Somehow, I don't think Israelis appreciate the snub.

But true to form, Blair gave himself political leeway to endorse the plan should Israelis choose to play hardball.

Mr Blair offered one concession to Mr Olmert. He left open a door to Mr Olmert's plan when he said that if negotiations between the Israelis and Palestinians failed to make progress, the status quo was not an option. He warned the international community that if it did not do enough to make negotiations work, he expected the Israelis to act unilaterally. "We, the international community, have got a choice," Mr Blair said. "We either put our best effort into making sure that negotiated settlement becomes a reality, or we are going to face a different reality."

The concession is partly because Mr Blair does not want to alienate the Israeli government. With his tenure as premier nearing its end, Mr Blair is keen to play an active role in trying to rekindle Israeli-Palestinian negotiations, according to western diplomats in Israel. Mr Olmert hinted that if negotiations made progress, there might be a role for Mr Blair.